St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1887-12-31

branches complete system OF
railway extending from Goshen, CAL,
| to Needles, Ari.. thence through Ari-
iona and New Mexico and through part
thence to New Orleans, was put into
operation by men prominently con-
nected with the Central Pacific, and
they secured connection with the East
from New Orleans by water. This 'sys-
3tem, known as the Southern Pacific sys-
TEN, was operated by the Central Pa
cific prior to 1885, but then change
was made, the system being divided into
two parts, one including the Central
Pacific and leased lines north of Goshen,
and the other the Southern Pacific
and leased lines south of Goshen,
and both systems were leased to Ken
| lucky corporation known as the South
ern Pacific company. The latter COM
pany assumed payment of all the Cen
/ trail Pacific obligations, by way of
Interest, and also of the government re-
rquirelnents, and agreed to pay an annual
rental fixed at minimum of 81, 200. 600.
In addition to this sum the Southern
Pacific company agreed to make the
entire amount of its payments equal to
1.-THE actual net earnings of the road, such
payments not to exceed g, 1000
j. CENTRAL BRANCH, UNION PACIFIC.
The Central branch, Union Pacific
railroad, extends from AtchiSOn to
Waterville, Kan..a distance of 100 miles.
1t is declared to be ''well constructed,
fairly equipped, and traverses coun-
try well adapted to maintain its present
earning power, and probably tOincrease
it," The cost of reproducing it in It's
present condition is estimated by Col.
Morgan at s2,O04.00O. Its aver
age net earnings for three
years past were S341 900 annually.
An enforcement of the statutory lien,
either at the maturity of the debt or at
an earlier period if the debt or any por-
ton of the same could be made to ma
ture before the date now fixed by law,
would result in sale; at which it could
hardly be expected that any bid in ex-
cess of the amount due on the first
mortgage bonds would be made. The
Union Pacific railway, and perhaps
other railways now extending
their roads westward. might be-
come competitors; but it is
not to be supposed that any of them
would give for this property, in addi-
ton to the amount of the first mortgage
debt, sum in any way approXimating
the amount due the government. The
probable result would be, as in the case
of the compulsory sale OF the Union Pa
cific railway, that the indebted corpora
ton, or some of its prominent officers,
acting in their own behalf, would ac-
quire the title to this road, so that the
ultimate effect would be merely present
ing to them as gift substantially the
whole amount due to the United States.
THE SIOUX CITY.
The Sioux City IL Pacific railroad is a
u,ail oOp cfruatad sin rl track road Nv
tending from Sioux City, To-, to Fremont.
Neb., its length being 101.5S miles. At
California junction short branch eX-
tends to Missouri Valley Junction,
distance of 5.S4 miles, at which point it
connects with the Chicago d North
western railway. Its average earn
ingS for the past two years were
1921. 1862. Its funded indebtedness. eX-
elusive of government debt, is 81 ,62S,
600. In 1872 it issued S169,000 preferred
stock, guaranteed az per cent annual
dividend, and the report declares the
possession, control and operation of this
branch essential to the operation of the
Sioux City d Pacific itself. The net
amount of the company'S obligations to
the ~United States is $3.50, 057.01;
total of debt to United States at matur-
ity, including $50 per cent interest,
is [I.DI
at per sent per annum, compounded,
s., 100000. The amount which would be
required to comply with the require
ments of the act herewith submitted,
applicable to this company, would be for
the first ten years:
Three per cent of So, 800, 0O0....... 500. 600
tOne-half of l per cent of outstand-
ing ponds..... ..-.....-....-....". IO,OOO
rr.I c11e 900
And, after the expiration of ten years,
the annual requirement would be $780,
800.
"a LEGISLATION.
The commission next discusses the
question of legislation, looking to the
adjustment of the relations between the
Pacific railroad companies and the gov
ernment as follows: In the computation
of the present value of the debt,
it is directed that the amount in
held in the sinking fund of the
United States shall be deducted
after diScOunting the net amount of
that debt at the maturity of the bonds,
and not before, affecting such discount;
that the discount be computed at 3 per
cent compound interest, to add to the
statutory lien of the United States the
security of contract mortgage with
per cent, paying Semi-annuaily, with
the further security of sinking fund
for the re emptiOn of the principal of
the debt at the expiration of fifty years.
That the provisions of the bill for an is
sue of bonds bearing interest are SIM
pier and more easily understood than
those calling for series of equated
payments and provides that in the event
of any default which shall continue for
six months, either i'll the payment
of interest on the bonds or
in the payments required for
the sinking fund, the entire debt shall,
at the option of the United States, i'm
mediately mature. 1t is necessary to
forbid the declaration of dividends eX-
cept from the earnings of the fiscal year
in which they are declared, an after
all payments for interest and sinking
fund requirements have been made. The
provision requiring the companies to
agree to institute, on the demand of the
department of justice. all such suits and
proceedings as may be required by it to
be brought against any officers or agents
against whom misrepresentation of as
sets or other cause of action is or may
hereafter be alleged, seems to be the
only practicable remedy for the viola
ton of duty which it is believed has
occurred.
Eeightll-In the event of the failure
of any of these companies to accept
the provisions of the act, the require
ments of the Thurman act are amended
so as to apply respectively to the exist
ing condition of each of the said COM
panies. The Union Pacific Railway
company is required to pay 40 per cent
per annum of the net earnings of both
the Union Pacific and Kansas Pacific
roads. If the present circumstances of
this company continue, the sum pro-
duced by this requirement would be
about 81, 100000 per annum.
PART SECOND.
This portion of the report treats of
the financial operations of the bond